* S&P 500 inches up in early trading
* Trump tweets on lack of progress in Mexico talks
* Mexican peso hit by Fitch downgrade
By Caroline Valetkevitch
NEW YORK, June 6 (Reuters) - The U.S. Treasury yield curve flattened on Thursday as the European Central Bank committed to leaving interest rates steady into the first half of 2020, while major world stock indexes were mixed following U.S. President Donald Trump's fresh tariff threat against China.
The ECB's move was less aggressive than what some traders had expected and led to selling in shorter-dated German government debt, which in turn spilled over into shorter U.S. Treasury maturities, traders and analysts said.
Much of the yield curve flattened, coming off its steepest level in seven months the previous day. The gap between two-year and 10-year yields US2US10=TWEB narrowed by 2.6 basis points to 25.10 basis points. 10-year yields DE10YT=RR tumbled to a record low of -0.240% before retracing to -0.220%. Benchmark 10-year notes US10YT=RR last rose 6/32 in price to yield 2.1036%, from 2.123% late on Wednesday.
U.S. stocks were mixed in early trading, with continued hopes of an interest rate cut from the Federal Reserve helping to support the market.
Adding to recent trade tensions, Trump said he would decide on more China tariffs "probably right after the G20," which followed his overnight threat to put tariffs on "at least" another $300 billion worth of Chinese goods. feels like an escalation of tensions and may be an elongated trade war and we might have to recalibrate lower," said Art Hogan, chief market strategist at National Securities in New York.
The latest flare-up in tensions follows mixed economic data that rekindled woes over the health of the world's top economies but also spurred expectations that central banks could ride to the rescue.
The Dow Jones Industrial Average .DJI rose 91.85 points, or 0.36%, to 25,631.42, the S&P 500 .SPX gained 6.84 points, or 0.24%, to 2,832.99 and the Nasdaq Composite .IXIC dropped 1.47 points, or 0.02%, to 7,574.00.
The pan-European STOXX 600 index .STOXX lost 0.09% and MSCI's gauge of stocks across the globe .MIWD00000PUS gained 0.13%.
Mexico's peso suffered under a double whammy from trade woes with the United States and ratings agency Fitch downgrading the country's credit rating to BBB, while Moody's changed its outlook to negative from stable. Mexican peso lost 0.56% versus the U.S. dollar at 19.69.
The dollar index .DXY fell 0.4%, with the euro EUR= up 0.61% to $1.1287.
In the oil market, U.S. crude CLcv1 fell 0.29% to $51.53 per barrel.
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